Taiwan’s UMC Prepares for AI Demand, Expects Uncertain Q3

United Microelectronics Corp (UMC), a Taiwanese chipmaker, has expressed caution about the uncertain demand in the third quarter. Despite this, the company remains committed to its 2023 capital spending plans as it prepares to meet the increasing customer demand for artificial intelligence (AI) chips.

The semiconductor industry has faced challenges due to global economic issues impacting demand for chips used in various sectors, including automotive and mobile devices. UMC’s competitor, TSMC, the world’s largest contract chipmaker, recently projected a 10% decline in sales for 2023 and revealed plans to limit investment spending.

During an earnings call, UMC co-President Jason Wang mentioned that although some market segments experienced limited recovery in the second quarter, overall market sentiment remains weak. Wang added that the outlook for wafer demand in the third quarter is uncertain due to inventory corrections in the supply chain.

Despite these challenges, UMC is maintaining its capital spending guidance for 2023 at $3 billion, compared to $2.7 billion in the previous year. The company aims to meet the emerging AI market demand by offering silicon interposer technology and increasing production capacity.

In the second quarter, UMC reported a 21.9% year-on-year decline in revenue, amounting to T$56.3 billion ($1.80 billion). However, compared to the previous quarter, revenue increased by 3.8%. Wafer shipments remained flat quarter-on-quarter, while capacity utilization slightly improved to 71% from 70% in the first quarter.

UMC serves clients such as Qualcomm Inc and Germany’s Infineon. The company’s shares on the Taiwan Stock Exchange have risen approximately 11% this year, although they closed down 1.2% on the day of this announcement.

As UMC anticipates uncertain demand in the coming months, the chipmaker remains committed to meeting the evolving AI market needs and aims to leverage its silicon interposer technology to capitalize on opportunities in the semiconductor industry.